Australian Securities and Investments Commission v Mega-Money Pty Ltd [2008] FCA 759 (21 May 2008)

Australian Securities and Investments Commission v Mega-Money Pty Ltd [2008] FCA 759

CORPORATIONS AND INSOLVENCY - application to fix and determine the remuneration of a liquidator of an unregistered managed investment scheme and liquidator of the first to sixth defendants and the eighth defendant

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v MEGA-MONEY PTY LTD ACN 076 891 542, SEVELLE CORPORATION PTY LTD ACN 118 374 324, SEVELLE DEVELOPMENTS PTY LTD ACN 106 433 603, SEVELLE DEVELOPMENTS NEWCASTLE-HUNTER PTY LTD ACN 112 548 366, SEVELLE DEVELOPMENTS CENTRAL COAST PTY LTD ACN 117 287 108, SEVELLE DEVELOPMENTS SOUTH COAST PTY LTD ACN 117 287 046; DAVID DAYAN SEVELLE; and SEVELLE DEVELOPMENTS CANBERRA PTY LTD ACN 117 286 941
QUD429 OF 2006

GREENWOOD J
21 MAY 2008
BRISBANE

AND:

MEGA-MONEY PTY LTD ACN 076 891 542
First Defendant

SEVELLE CORPORATION PTY LTD ACN 118 374 324
Second Defendant

SEVELLE DEVELOPMENTS PTY LTD ACN 106 433 603
Third Defendant

SEVELLE DEVELOPMENTS NEWCASTLE-HUNTER PTY LTD ACN 112 548 366
Fourth Defendant

SEVELLE DEVELOPMENTS CENTRAL COAST PTY LTD ACN 117 287 108
Fifth Defendant

SEVELLE DEVELOPMENTS SOUTH COAST PTY LTD
ACN 117 287 046
Sixth Defendant

DAVID DAYAN SEVELLE
Seventh Defendant

SEVELLE DEVELOPMENTS CANBERRA PTY LTD
ACN 117 286 941
Eighth Defendant

1. That the liquidator’s remuneration for the period 4 July 2007 to 15 February 2008 in respect of Mega-Money Pty Ltd (in Liquidation) be approved, fixed and paid in the amount of $53,894.79.

2. That the liquidator’s remuneration for the period 4 July 2007 to 15 February 2008 in respect of Sevelle Developments Pty Ltd (in Liquidation) be approved, fixed and paid in the amount of $36,869.29.

3. That the liquidator’s remuneration for the period 4 July 2007 to 15 February 2008 Sevelle Developments Newcastle-Hunter Pty Ltd (in Liquidation) be approved, fixed and paid in the amount of $18,474.29.

4. That the liquidator’s remuneration for the period 4 July 2007 to 15 February 2008 in respect of Sevelle Developments Canberra Pty Ltd (in Liquidation) be approved, fixed and paid in the amount of $31,484.79.

5. That the costs of and incidental to this application be costs in the liquidations of:

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

AND:

1 This is an application by Notice of Motion for the fixing and determination of the remuneration of the liquidator appointed to an unregistered managed investments scheme called the "Mega-Money Scheme" and an application to fix and determine the remuneration of the liquidator appointed to each of the entities forming part of the Mega-Money group of companies. The application is supported by an affidavit by Justin Denis Walsh sworn 15 April 2008 and filed 17 April 2008, together with a range of exhibits which depose to the chronological schedule of events that have been undertaken and work done in connection with the investigation of the affairs of the scheme, generally, and the affairs of each of the companies, specifically. The application has been served upon the plaintiff, Australian Securities and Investments Commission and each of the defendants. There is no appearance by any of these parties in response.

2 On 4 July 2007, Justice Dowsett ordered that the liquidator’s remuneration in connection with the Scheme be calculated as determined by the Court on the basis of the time occupied respectively by the liquidator, the liquidator’s partners and employees in addition to payment or reimbursement of such expenses and disbursements as shall be incurred or made in the due course of the liquidation. His Honour further ordered by Order 2(d) that such remuneration, expenses and disbursements be paid from the assets of the Scheme as a first charge. A similar order was made by Order 3(d) in relation to the liquidator’s remuneration concerning work done in connection with the affairs of the first to sixth respondents inclusive and the eighth respondent.

3 The affidavit of Mr Walsh seeks to identify the quantum of the costs by reference to each of the above orders.

4 An examination of the affidavit of Mr Walsh reveals that the Mega-Money Scheme was in fact conducted as was the affairs of each of the entities, on an aggregated basis, in the sense that one company vehicle was used for all activities. It has become therefore very difficult for the liquidator to, firstly, obtain completely and comprehensively all the books of account and financial records of each of the entities and the scheme more generally; and secondly, to identify the cash flows and expenditures and other financial issues associated with each particular company.

5 Secondly, it should be said that the affairs of the companies and the scheme more generally have involved a wide range of activities. The liquidator has been compelled to not only conduct investigations in the orthodox way but also conduct an examination of the directors and staff and interview investors to try and discern exactly the underpinning transactions and various financial arrangements and, in particular, the way in which money was dealt with.

6 Further, the liquidator has been compelled to look closely at a range of real property transactions and examine, obviously enough, the accounts relating to the debtors records. The liquidator has had to consider aspects of a landlord’s lien in relation to rent; the way in which motor vehicles were leased, treated and dealt with; affairs in relation to the creditors and investors more generally; aspects of the arrangements with employees; and specifically, examine particular transactions deposed to at paras 45 to 52 of Mr Walsh’s affidavit. Those paragraphs deal with some specific transactions; arrangements in relation to a yacht; and arrangements in relation to a specific investment project called the "Michelangelo Project" which was a property project.

7 The facts deposed to by Mr Walsh also reveal that there was use of investors’ money for the personal purposes of Mr David Sevelle and his family and loans to directors and other matters. In examining the affidavit material, I have attempted to form a view about the reasonableness of the proposed remuneration against the background of all of these events and the running schedule of activities recited in the exhibits to Mr Walsh’s affidavit. I am satisfied that the proposal for fixing the remuneration is reasonable. I should add one further matter and it is this. The affidavit material deposes to the work undertaken by the liquidator and staff in relation to each particular entity and then separately, work undertaken in relation to the Mega-Money Scheme more generally. The liquidators have sought to apportion tasks related to the Scheme more generally to particular companies and Exhibit JDW2 to Mr Walsh’s affidavit identifies the distribution to each of the seven respondents of particular tasks. The costs of that general work relating to the Scheme have been allocated on a one-seventh basis to each entity.

8 The one-seventh distribution of those costs for each task is taken up for the relevant entities in the application for remuneration for each particular company. I am satisfied that this is a perfectly sensible methodological approach to the distribution of the more generally incurred costs and expenses and time charges for that work. Accordingly, I make orders in terms of paras 1, 2, 3, 4, and 5 of the Notice of Motion filed 17 April 2008.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Counsel for the Plaintiff:	No appearance by the Plaintiff

Solicitor for the Plaintiff:	No appearance by the Plaintiff

Counsel for the Defendants:	No appearance by the Defendants

Solicitor for the Defendants	No appearance by the Defendants

Counsel for the Applicant Liquidator:	Mr G D Sheahan

Solicitor for the Applicant Liquidator:	Allens Arthur Robinson, Lawyers

Date of Hearing:	21 May 2008

Date of Judgment:	21 May 2008

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD429 OF 2006

JUDGE:	GREENWOOD J
DATE OF ORDER:	21 MAY 2008
WHERE MADE:	BRISBANE

JUDGE:	GREENWOOD J
DATE:	21 MAY 2008
PLACE:	BRISBANE

Federal Court of Australia

Australian Securities and Investments Commission v Mega-Money Pty Ltd [2008] FCA 759 (21 May 2008)